MGMC01H3 Chapter Notes -Ski Patrol, Lift Ticket, Cash Flow

546 views5 pages
Published on 26 Nov 2014
School
UTSC
Department
Management (MGM)
Course
MGMC01H3
Professor
Case 6:
Blue Mountain Resorts Ltd.
Abstract
Data collection is the practice of collecting and analyzing information about an interested topic
to help resolve demand, consumer, and financial questions, as well as to test hypotheses and
evaluate outcomes. Market research is a useful tool to influence whether an opportunity should
be pursued or not with both qualitative and quantitative justifications. As a company is ultimately
interested overall operational profits, it is important to ensure prospective projects can sustain
positive cash flow.
Problem Analysis
The following is a decisional case to which Gordon Canning must determine whether there is an
attractive opportunity for night skiing operations while recognizing the pricing, distribution and
promotional strategies it would require. Blue Mountain currently maintain 250 acres of ski trails,
offering 27 different types, 8 chair lifts, and 10 tows; however, as of now there are no proper
installations through lighting to facilitate skiing later in the night. It is important to understand the
supporting financial reasons via data collection in order to access whether Blue Mountain
should pursue night skiing operations and conduct the necessary installations for the 1979-1980
winter. These decisions need to be made prior July 1st to accommodate promotional efforts.
Demand Analysis
Blue Mountain positions itself as a company that prides innovation, success, and commitment to offering skiers the highest
quality and best value for their money. To support their position, Blue Mountain proposes lighting up hills with artificial light to
allow skiers to remain on hills until late in the evening. With this new concept, Blue Mountain could then offer the longest run,
highest vertical, and best snow conditions for night skiing in Southern Ontario. However, while an idea may be seemingly
functional, there must be a large enough demand for it to generate profit. In considering whether to pursue a night skiing market
or not, it is imperative to understand the consumer demand through previous spending patterns, interest, frequency, and
acceptance:
1. Utilizing internal data about consumer spending patterns will identify Blue Mountain’s most influential component of
revenue. With reference to exhibit 6, outlining the expenditure of a typical skier where the dollar revenue per visit
accumulates to an estimate of $16.84 and $10.15 towards lifts service, it represents the highest spending investment
with 60% of Blue Mountain’s source of revenue. While food and beverage estimate $3.82 and other amenities such as
housing, schooling, rental, repairs, and shops estimate a total of $2.87, it represents a smaller portion of Blue
Mountain’s revenue with $23% and 17% respectively. Thus, as the dollar revenue is significantly more dependent on
the ski lift, it would be strategic to optimize profit tailored to ski pass options with food, beverages, and other amenities
as mere entertainment and support.
2. Assessing the primary data obtained from the implemented survey concerning night skiing will identify Blue Mountain’s
potential consumer influx and general demand. With reference to exhibit 3, the night skiing survey to 200 current
skiers, and appendix 1, table 1 that summarizes a cross tabulation of pass holder status to night skiing interest,
there is an evident 44.3% favor to the night skiing idea while the remaining 55.7% are less willing. Although there is a
more quantitative data to represent the disinterest for night skiing, there is still a great amount of individuals and
demand who feel night skiing is an attractive opportunity; it would be unwise to ignore the comparative minority when
the minority is this significant. Extracting from secondary data with Blue Mountain’s prior market research program, it is
approximated that 30,000 different skiers visited Blue Mountain annually. Utilizing this as a reference point contrasting
the percentage of favorability acquired, approximately 13,290 skiers would be interested in night skiing at Blue
Mountain with the remaining 16,170 indifferent. This demonstrates the substantial potential in the night skiing market
and profitable opportunity Blue Mountain can optimize with the 13,290 interested skiers. Segmenting the 13,290
individuals even further, with 60.7% as pass holders and 41.4% as regular lift tickets, they represent approximately
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8067 and 5502 respectively. As well, 17 pass holders in the survey were interested in night skiing at Blue Mountain of
the 28. A lot of the pass holders in the survey (60.7% to 39.3%) are more interested in the night skiing option than not.
This shows that pass holders believe night skiing would be more beneficial to them because as they have paid a set
fee for the season, having a greater time availability is preferred. Thus, when considering the night skiing opportunity,
the better time availability may have a positive impact on sales towards a season pass as it offers the individual longer
skiing hours, more flexibility, and minimal traffic, not being limited to only day times with everyone else. Blue Mountain
can then adjust their pricing strategies with reference to the season pass and regular lift ticket market accordingly.
3. Further analyzing the primary data acquired from the survey, a hypothesize frequency for night skiing can be
forecasted in the event that night skiing is implemented. On average, Blue Mountain skiers visit the resort about 10
times per season as proved from historic patterns. With reference to appendix 1, table 2 that summarizes a cross
tabulation of pass holder status to the frequency of night skiing where the frequency divisions are instead set as an
average number between the low and high end range, the average number of visits for pass holders and regular lift
tickets are rounded to 13 and 9 respectively. Thus, while there are 8067 season pass and 5502 regular tickets users,
those individuals generate revenue even further for Blue Mountain with each returning 13 and 9 times correspondingly.
While the season pass would obviously generate less than regular ticket users for each returning visit with lift passes,
there are still profitable opportunities through food and beverages and other amenities. As well, this may be tactical in a
qualitative perspective such that consumers become accustom to visiting Blue Mountain every season, become loyal to
the brand, and increase positive word of mouth testimonies. Therefore, in considering the night skiing opportunity, it is
important to calculate each returning visit from the individual customer.
4. Evaluating more question centric extractions from the survey, an idea for a fair price can be established to maintain an
equilibrium between consumer satisfaction and company profit. With reference to appendix 1, table 4 and table
5 that summarizes a cross tabulation of pass holder status to the perspective of fair ticket price where the ticket prices
are assumed at a fixed minimum of $3 and maximum of $9 for mid-week, and minimum of $4 and maximum of $12 for
weekend, the average price for mid-week nights and weekend nights for regular tickets are $5.46 and $7.39
respectively. The average prices are only calculated for those without pass holder status as pass holders are assumed
to pay a flat fee and their judgment would be less relevant for pricing a regular ticket. With the mid-week average of
$5.46 obtained from the 59 surveyed individuals, comparative to the weekend average of $7.39 obtained from the 61
surveyed individuals, there is a belief that the mid-week ticket price should be charged less than that of weekend prices
or weekend prices are accepted at a premium higher than regular mid-week prices. Thus, in considering pricing
strategies for mid-week and weekend nights, the tickets should be established generally towards a rounded $5.50 and
$7.50 for both marketing appeal in even numbers and consumer acceptance. A season’s pass should be priced such
that it is less expensive than paying regular ticket prices per visit to be more valuable for the consumer. As a pass
holder tends to return 13 times, the considered price should be lenient below $71.50 to which an individual can simply
purchase regular tickets every time instead. There must be enough motivation for an individual to pay a flat fee for a
number of times for season pass sales to occur.
Target Consumer Analysis
The Blue Mountain consumer base is segmented into 3 areas with day skiers, multi-day skiers, and vacations representing
38.4%, 35.5%, and 26.1% respectively. While this indicates the amount of days stayed by an individual, a consumer profile would
further depict the demographic Blue Mountain targets. Knowing the attributes of the prime night skiing candidate, Blue Mountain
can adjust their promotional and communication efforts accordingly:
1. With reference to exhibit 3, question 18, that outlines the correlation between skiing
tendencies and gender, it is evident that night skiing at Blue Mountain has a large market
for males with an astonishing 69.5%. Meaning, while this suggests males are the
majority skiers at Blue Mountain, both in general and for night skiing specifically,
promotional efforts should tailor towards the masculine perspective to include action or
attractive females. Furthermore, food and beverages and other amenities could be
greater and more influential for the male market to generate more revenue while they ski
at Blue Mountain.
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Document Summary

Data collection is the practice of collecting and analyzing information about an interested topic to help resolve demand, consumer, and financial questions, as well as to test hypotheses and evaluate outcomes. Market research is a useful tool to influence whether an opportunity should be pursued or not with both qualitative and quantitative justifications. As a company is ultimately interested overall operational profits, it is important to ensure prospective projects can sustain positive cash flow. The following is a decisional case to which gordon canning must determine whether there is an attractive opportunity for night skiing operations while recognizing the pricing, distribution and promotional strategies it would require. Blue mountain currently maintain 250 acres of ski trails, offering 27 different types, 8 chair lifts, and 10 tows; however, as of now there are no proper installations through lighting to facilitate skiing later in the night.

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